Chinese steelmakers are forced to respond to falling prices and demand

Chinese steel companies struggle with falling prices – mills forced to react quickly to drop in demand in China after the holidays, reports Kallanish.

This week, steel producers in Yunnan province announced equipment maintenance. Thus, they aim to reduce construction steel production by 300,000 tons in October due to high coal prices and low prices for steel products.

In addition, market sources said that Yunnan steelmakers are requiring traders to pay in advance before shipping steel – previously payment was made upon receipt.

This week, Hubei steelmakers also announced the suspension of construction steel supplies to avoid further losses. Joint notice on sales price and volume restrictions. since October 10, Baowu Echeng Steel, Wuhan Steel and Jinshenglan Steel have posted.

The Jinshenglan company reported a reduction in billet production by 5,000 tons during October 8-31 due to a major overhaul of the converter, in addition, the work of the steel rolling shop was suspended for 4 days.

Chinese steelmakers are likely trying to influence the market with non-production restrictions, but this is having little effect, so more and more companies will have to temporarily cut production.

Since the end of September, Lvliang Jianlong, Jinnan Steel and Taihang Steel, located in Shanxi, resorted to limiting blast furnace production. In October, other steel mills of the province joined it. Some leading companies, such as Shougang Jingtang and Baosteel, have announced the start of overhauls to reduce supply pressure on the market.

It remains an open question whether China will impose steel production restrictions in the fourth quarter of this year. As SteelMint informs, if this policy is not implemented, the volume of steel smelting in the country at the end of 2023 is likely to increase by approximately 47 million tons compared to the previous year (1.018 billion tons in 2022). In addition, Chinese steel mills will look more aggressively at export markets. Then, according to forecasts, steel exports from China may reach about 89 million tons by the end of the year.

If the government still implements a control policy, the country may end 2023 with an estimated steel production rate of 1.011 billion tons. In this case, the cumulative volume of production in September-December should not exceed 300 million tons, and the average daily output of steel – 2.46 million tons , which should be 16.2% less than the average daily indicator for 9 months.

As GMK Center reported earlier, China in August 2023 reduced production of steel by 4.8% compared to the previous month – to 86.41 million tons. The indicator fell at a faster pace than the market expected, as some steel companies cut output amid falling margins. Compared to August 2022, steel production in the country increased by 3.2%.